New NCIB to be announced?Management has clearly laid out the game plan for how excess free cash flow will be utilized in 2021 -- 2/3 will go towards debt and 1/3 will go toward share buybacks. Management has reiteration this allocation strategy over and over again, including during its Q1 conference call and its Investor's Day presentation.
The current NCIB was to buyback up to 44 million shares. As per their 2020 Q4 earnings statement (released on February 3, 2021): "Subsequent to the end of the quarter, the TSX accaepted a notice to commence NCIB for up to 44,000,000 common shares." During Q2 earnings call, the CEO explicitly stated that SU had exercised the NCIB by buying back 20 million shares from January to April 2021. I also know that SU has been buying loads of shares in May and June.
I would imagine by the time Q2 earnings are released on Wednesday, SU would be close to buying back 44 million shares this year (or at least very close to that number). Management has not expecting the amount of free cash flow that they are seeing. Back in late 2020, management was projecting between $1.5-$2.5 billion in free cash flow (of which $1.0-$1.5 billion was to go towards debt and $0.5-$1.0 billion was to go to share buybacks). Well, in Q1 alone, SU realized $1.4 billion in excess cash flow (beyond operating expenses and dividend payment). Even with production levels lower for Q2, higher oil prices will likely mean that even more money was made in Q2.
I am wondering how SU will spend that excess free cash flow. I would imagine they will announce a new NCIB, or, maybe raising the dividend. I fully understand that management has said a dividend hike should not be expected until 2022, but I think from the numbers that I am analyzing, there is sufficient FCF to hike the dividend immdiately (to at least C$0.26/quarter).